The new import bans on Russian goods, according to European Commission President Ursula von der Leyen, will deprive Moscow of an additional €7 billion ($6.7 billion) in revenue. In addition, new prohibitions on the export of key technology used for the army, such as aviation products, electronic components and specific chemical substances, are incorporated.

In announcing the sanctions, von der Leyen noted that “some developing countries still need some supplies of Russian oil, but at low prices,” and therefore the G7 countries agreed to introduce a price cap. of Russian crude.

“This is why the G7 has agreed in principle to introduce a cap on Russian oil prices for third countries. This cap will, on the one hand, help reduce Russia’s income and, on the other hand, keep global energy markets stable,” Von der Leyen said, adding that the current sanctions package lays “the legal foundation for this cap on oil prices”.

Members of the Group of Seven (G7), made up of the UK, US, France, Germany, Italy, Canada and Japan, have already agreed to introduce caps on Russian oil prices on September 2.

The cap on the price of Russian oil is in line with the political agreement reached by the G7 leaders, proposing that the transport of Russian oil and its derivatives be only allowed globally if the products are sold below a certain amount.

The prohibition for EU citizens to be part of the boards of directors of companies is designed to avoid possible cases such as that of former German chancellor Gerhard Schröder, who worked for Gazprom.

“Russia must not benefit from European knowledge and its experts,” said von der Leyen.

The high representative of the EU for Foreign Policy and Security, Josep Borrell, revealed that the number of natural and legal persons subject to the bloc’s punitive measures will amount to about 1,300, and among them there are individuals and entities that contribute to that the “territorial integrity of Ukraine” is undermined.

The sanctions will target Russian individuals and authorities in Russian-controlled areas who organized referendums on joining Russia in two republics of Donbass and the Kherson and Zaporozhie regions.

In addition, Borrell proposes to appoint the top officials of the Russian Defense Ministry responsible for supporting the country’s army in Ukraine with weapons and equipment, as well as the declared mobilization of 300,000 reservists.

In the category of economic actors, people, not necessarily Russians, who participate in the circumvention of sanctions will be included, Borrell said.

The European Commission’s announcement comes after the leaders of Lugansk and the Kherson and Zaporozhie regions asked Vladimir Putin to join Russia after holding referendums on accession, which took place from September 23 to 27.

Moscow: Russian oil only for countries operating under market conditions
From the Kremlin they warned that Moscow will send its crude only to countries that “operate under market conditions”, and that supplies that do not go to nations that support price limits will go to “alternative destinations”.

The cap on the price of Russian oil is in line with the political agreement reached by the G7 leaders, proposing that the transport of Russian oil and its derivatives be only allowed globally if the products are sold below a certain amount.

EU countries will stop importing Russian oil by pipeline from December 5.

Leaders of Lugansk, Kherson and Zaporozhye ask Putin to join Russia
The leader of the Lugansk People’s Republic (PLR), Leonid Pásechnik, the head of the Regional Civil-Military Administration of the Kherson region, Vladimir Saldo, and the representative of the Zaporozhye region, Yevgueni Balitski, addressed this Wednesday to the Russian president, Vladimir Putin, with the request to incorporate the territories into Russia.

“Since the population of the republic approved the decision in the referendum, I ask you to consider the possibility of the Lugansk People’s Republic becoming part of Russia as a constituent entity of the Russian Federation,” said the LPR leader.

In his speech to Putin, Passechnik noted that the RPL is aware of its historical, cultural and spiritual ties with the people of Russia.

The senior official denounced that “for eight years, residents of the Lugansk People’s Republic have been subjected to brutal bombing and genocide by the kyiv regime.”

“In their impotent rage at their unsuccessful attempts to invade the territory of the Luhansk People’s Republic and their failures in open combat with the republic’s defenders, the neo-Nazis have only intensified their terror and bombardment of civilian infrastructure. and industrial, destroying schools, hospitals and nurseries,” he said.

According to Pásechnik, most of the world is “silent” about what is happening in Donbass.

“Not a single state or international organization has condemned kyiv’s actions in Donbass,” he continued, adding that only Russia “has provided and continues to provide extensive assistance to the population of Donbass.”

For his part, Saldo stressed that “the people of Kherson province have decided courageously and unequivocally that the only path they want to follow is that of union with Russia as an integral part of their multinational people.”

“Today, when freedom of thought, expression, conscience and religion is in danger of being eradicated in favor of centrally imposed values ​​that are often contrary not only to reason but also to nature itself, we, the people of Zaporozhie For the sake of our common goal of guaranteeing peace and security, the rule of human rights and freedoms, we want to become a single state with the Russian Federation”, says Balitski’s petition to the Russian president.

In the referendums, which took place from 8:00 a.m. (local time) on Friday, September 23, to 4:00 p.m. on Tuesday, September 27, the voters of the people’s republics of Donbass and the regions of Kherson and Zaporozhie voted for Please join Russia.

93.11% of voters in Zaporozhie and 87.05% in Kherson voted yes to being part of Russia. In the Lugansk and Donets republics, 98.42% and 99.23% of voters voted affirmatively.

The process of integrating new regions into the Russian Federation can take some time, as it requires the approval of the president and parliament.

However, last Friday the Kremlin spokesman, Dmitri Peskov, was convinced that the necessary steps will be taken “quickly enough”.

Russians withdraw from the Dakar 2023 due to the demand to condemn their country
The Russian team KAMAZ-Master will not participate in the next Dakar rally after announcing that it will not sign the documents that would force it to “denounce” its own country.

Thus, for the first time in 24 years, the famous annual competition will not have Russian representation.

In a statement published on the KAMAZ-Master website, the 19-time rally-winning team criticized the decision of the International Automobile Federation (FIA), which allows the Russians to participate neutrally, but on the condition to sign certain documents that include statements about the conflict in Ukraine.

“The participation of Russian athletes in the Dakar rally is conditioned by the need to sign the FIA ​​questionnaire denouncing the Russian special operation in Ukraine. In our opinion, the content of this document is of a political nature and violates the principles of equal conditions for athletes.

“We consider that it is impossible for us to sign those documents and participate in the competitions in those conditions,” the message reads.

The drivers indicate that their position “is clear: always be with the country, especially when it finds itself in a difficult situation.”

Last March, the FIA ​​required Russian and Belarusian drivers to sign a declaration of commitment to the principles of peace and political neutrality that includes a clause of solidarity with Ukraine.

The move was announced amid broader restrictions imposed on Russian sport by various sports federations, which followed a stern rebuke of Russia by the International Olympic Committee.

Earlier this month, Russian drivers Sergei Karyakin and Anastasia Nifontova condemned the requirement, announcing that they will not take part in the 45th edition of the Dakar to be held in Saudi Arabia between December 31, 2022 and January 15, 2023.

Meanwhile, co-driver Konstantin Zhiltsov chose an alternative option by changing his sporting nationality and will participate in the Dakar under the Israeli flag, evading the restrictions.

(With information from EFE, AFP and RT in Spanish)

Before, the only concern of Eladio Machín, from Cienfuegos; the Asdrúbal López, from Guantánamo and the Luis Bocourt, from Artemisa, consisted of collecting the grain, reducing its humidity, grinding it to remove the shell, classifying it according to its size and eliminating defects by weight (green grains, broken grains or shells). and color (black, white, fermented and canary).

In these times they have to add other items. In the Artemiseña company located in Bahía Honda, they also make charcoal, collect palm kernels, sell yaguas, rice, mameyes… to improve their income.

It is no longer enough for them to benefit from the product of the five pulpers in the West, three from the Artemisa province and two from nearby Pinar del Río; They have no other choice but to diversify productions, since the fruit originating from the highlands of Abyssinia, now Ethiopia, brings them considerable losses.

It is well illustrated by Carlos Espinosa Piedra, director of that Coffee Processor. “In order to collect all the grain, the State raised the purchase price for producers, without taking into account the coffee value chain, which requires a treatment process.

“So in 2021 we bought a ton of Arabica coffee at 149,000 pesos and sold it at 71,939; that of Robusta to more than 83,000, and we received 46,200 for its sale. Due to the notable difference in prices in the purchase and sale, last year’s losses amounted to more than nine million pesos, ”he reveals.

The really curious thing is that, if they had been more efficient and productive, the purchase and sales would have been greater… and, correspondingly, the losses would have been the same.

This was the case in Cienfuegos, despite higher levels of efficiency, and more severely in Guantánamo, according to Rolando Martell, financial accounting director of the Asdrúbal López processor, where they faced losses amounting to 186 million 297 thousand pesos.

Martell warns that the Guantanamo company was distinguished by solidity, supported by productive and economic results that reflected audits and criteria of financial institutions. What deteriorated its indicators was the incongruous difference between the purchase prices of raw materials and those of sale of benefited and processed coffee beans.

Espinosa Piedra, director of Luis Bocourt, points out that this situation influences not being able to apply monetary incentives to workers or distribute profits at the end of each quarter. On top of that, they had planned an average salary of 3,900 pesos, and only reached 3,270.

After numerous analyses, the Ministry of Finance and Prices approved the Agroforestry Group (GAF), belonging to the Ministry of Agriculture, subsidies for the various processors in the country worth 419 million pesos, Elexis Legrá Calderín, director of Café, told Cubadebate. , Cocoa and Coconut of the GAF.

“This year a new subsidy will be approved again, but not for the product, but rather destined to honor the commitments with the producers and the Bank”, he specified.

“The companies will continue with losses due to the difference in coffee prices, which limits the application of salary incentives, differentiated payments or distribution of profits. Our strategy lies in promoting diversification and increasing exports, to obtain more income”.

Another path that does not imply renunciation

Its charcoal is in great demand at fairs and points of sale in Bahia. This year they plan to sell 114.5 tons. Photo: Otoniel Marquez.

So in the processor located in Bahía Honda they take the path of diversification, in search of much-needed profitability.

“That does not imply a renunciation of harvesting more and more coffee. We intend to collect more than 200 tons in 2023. We have already created a coffee UEB managed by the EJT, in La Palma, Pinar del Río. On October 30 another will be born in Sabanilla, San Cristóbal. And before next Friday the 26th we must establish the Pinar del Río Coffee Subsidiary Company”, underlines the director of Luis Bocourt.

“This year 36 tons of ours were exported to the Netherlands and Japan: 18 of Serrano Superior and the same amount of Serrano Lavado. The plan for the year amounts to 54. The other 18 correspond to the harvest that will begin in September,” adds Iván González Costa, head of production.

“We intend to become an exporting company, although that aspiration has not materialized yet; For now, we do it through Cubaexport.

“We have dedicated 92,980 in CL (Liquidity Capacity, a currency exchange control instrument) to producers so that they can buy batteries, limes, herbicides… We also organize fairs or direct sales of the supplies that we have in stock.”

“But currently the main production of the company represents 20% of revenues (barely 11 of the 45 million pesos). And diversification has made it possible to reduce the planned loss, from six million to just over three”, reveals Lázaro Proenza, economics of the entity.

A new drug and much more

Palmex, an effective nutritional supplement, is made with palm nuts sent from Rancho Canelo to the CNIC

“We are topping palm nuts and sending them to the National Center for Scientific Research (CNIC),” says Gelasio Rivera, head of the group that is making the most progress in its efforts to diversify: the Rancho Canelo farm.

An upright, industrious and enterprising man, this veteran filled his people with spirit, there in the heart of the hills of Bahía Honda, almost 40 kilometers from the municipal seat. Where the weeds grew, they erected showy coffee plantations: they snatched from the mountain more than 200 hectares that were populated with coffee trees. His dreams multiplied into thousands of cans full of grains, with sustained growth.

So, the farm belonged to the Minint. “We came to have 170 workers, and we are left with 34, due to the difficulties in continuing to serve them as they deserve.” Until recently they had 70. “Having a sufficient workforce has become extremely complicated.”

Of course, only the results of work will transform that landscape. In the midst of such efforts, they have become architects of diversification.

With the palm nuts sent to the CNIC, the promising Palmex is made, a highly effective nutritional supplement for alleviating the symptoms of benign prostatic hyperplasia. Every month they deliver two and a half to three tons, which brings them about 50,000 pesos. They also sell it in the town itself, and between the two sales they earn about 70,000 pesos.

José Amador and Carlos Cavada climb the trunk of palm trees to heights of 25 to 40 meters. With Isael Figueroa, Mario Luis Valido and Roberto Travieso, they have made palm nuts a distinctive item of the Bahiahonda company.

A smaller brigade collects and sells yaguas in Bahia, which bring them between 15,000 and 20,000 pesos. And another five plant cassava, sweet potatoes, rice… for self-sufficiency, sale to workers and a part to the population.

As if that were not enough, on the precise date and with a waning moon, they have collected such quantities of mamey that they far exceed 55,000 pesos. And it would have happened in a similar way with the mango, were it not for the scourge of pests and the lack of current in the industry.

“We are beaten with the breeding of dark-coated pigs. By December we hope to have more than a hundred. We have sold a lot of ginger. And we have good coffee nurseries. I plan to sell between 13,000 and 15,000 Robusta seedlings for planting in the plains”, says Gelasio optimistically.

Any Artemiseño knows that Angerona (on the outskirts of the provincial capital) became the largest coffee plantation in the country, and Cuba the world’s leading exporter at the beginning of the 19th century. However, from producing 62,000 tons annually in the 1960s, it went on to stock only 6,000 and import 8,000 annually to guarantee supplies to families.

Reversing that situation will now depend on tenacity, on diversifying and making use of whatever formula translates into profits and motivations, on putting endless ideas into each cup of coffee.

(By Joel Mayor Lorán y Otoniel Márquez)

This Tuesday, August 23, the sale of foreign currency began in 37 cadecas throughout the country, as part of the implementation of the foreign exchange market. At the Round Table on Monday 22, the Vice Prime Minister and Minister of Economy and Planning, Alejandro Gil Fernández, and the Minister President of the Central Bank of Cuba, Marta Sabina Wilson González, explained the operation of this exchange mechanism that complements the purchase of currencies, initiated on August 4.

Cubadebate visited three Havana cadecas (Mónaco, 23 and J, and 21 and 42) that began selling foreign currency to natural persons this Tuesday.

At the Monaco exchange house, the administrative provincial deputy director of Cadeca S.A. in Havana, Milagros Hernández González, commented that the demand “will always be greater than the supply”, because that establishment sells foreign currency to the extent that it is received.

“The availability we have, that is what is going to be sold to the population,” stressed Hernández González.

The purchase of foreign currency –acknowledged the Cadeca official– was carried out with the aim of “equipping ourselves with the currency to reach this moment”.

Although the workers of the Mónaco cadeca, in Diez de Octubre, were prepared to start operations, and tickets made in the establishment had been distributed to organize the queue, the sale of foreign currency was delayed until 9:20 a.m. due to software problems.

Susana Mérida, the third in line at Monaco, stated that the sale of foreign currency “is a measure that we have been waiting for a long time, because there are really many people on the street selling it at outlandish prices, and we always hope that the State, which the Government, was going to sell it much cheaper”.

The rate for the sale of dollars this Tuesday is 123.6 CUP.

Mérida declared that “I wish they would make it much cheaper, because going from 25 that cost a dollar to now, which is 120, is quite a lot, but it is also more expensive on the street. Since the government didn’t sell it, then you had nowhere to buy it and you had to buy it on the street. And, well, what remedy to buy it here. There is more security.”

She went to the cadeca because she needs to buy dollars to travel to Panama.

The possibility that the coleros control the queue at the Monaco exchange house is another issue that worries Susana Mérida.

“The man who was in front of me did not come to buy, he marked for two people who are the ones in front of me, and I got up at four in the morning to come here. We must take into account the fight against coleros, “she said.

For Adrián Robles, who was waiting to buy euros in order to transfer them to an MLC card, the sale is going to help the value of foreign currency go down in the informal market, but only if that operation is maintained.

“People who are going to leave the country, who need a certain amount of money, are not going to stand in this queue. If you need 10,000, 15,000 or 20,000, you are not going to stand in line, just bring your family”, he commented.

At the exchange house on 23rd and J, in Vedado, the provincial director of Cadeca, Kenia Meza López, said that during the morning “everything has gone very well and as planned, because the information was given to the population with the time, we gave him all the explanation of the currencies we have today and the number of customers we could serve”.

The workers planned to deliver 190 shifts for the day at that establishment.

Estrella Delgado arrived at the Vedado cadeca at five in the morning to buy foreign currency and later transfer it in a bank to an MLC account, in order to purchase basic necessities.

“Regarding the measure, I think it is important that there is a sales capacity for the population, but I think it does not really solve the problem, because there is no correspondence between wages and prices, since there is a lot of inflation in the country. ”, Delgado pointed out.

She also compared the rate of sale of euros (125.1 CUP) with the minimum pension, around 1,500 pesos, and with her salary as a professional, which does not reach 5,000 pesos. “I wouldn’t buy thirty-odd dollars from you,” she said.

The provincial director of Cadeca, Kenia Meza López, referred to the low number of ATMs that worked this day, a situation that affected the speed of service in the three exchange houses visited.

At 23rd and J, two cashiers served the population, however, at the Mónaco cadeca and 21st and 42nd, only one worked.

Meza López said that the cause is the fluctuation of personnel that Cadeca had during the covid.

“Unfortunately, a Cadeca cashier is not trained in a day, but takes preparation. We are working on that, in September there is another course, we have published the call for those interested in occupying the places on the network, but we are working with the tellers that we have at the moment”, she explained.

The cadeca of 21 and 42, in the Playa municipality, distributed 91 shifts before starting the service at 8:30 a.m.

(By Ana Álvarez Guerrero, Darío A. Extremera Peregrín y Abel Padrón Padilla/Cubadebate)

Although it exceeds the multiplication table used for other products, an increase of 700 percent for drinking liquid, historically almost given away the service, continues to be laughable: the bills will reach between just 1.75 and 21 pesos per month per inhabitant, no more .

This only applies to houses connected to aqueducts, but the rest of the residential prices also oscillate by these figures, while the amount for wastewater treatment is, as usual, lower (precisely 30 percent of the amount per The consumption of water). Compared with the increase in the Unión Nacional Eléctrica, or with the new price of any pizza in Old Havana, this increase respects the preschool philosophy that no one is denied water.

In any case, these prices are not yet final – Yunior González, vice president of OSDE, puts the patch on it -; there will be a period of up to a year to study and decide how much they will eventually amount to .

Now … Will this increase in prices guarantee a better quality of services?

“From a purely economic analysis, our companies will continue in a similar situation”, confesses González, a hydraulic engineer by training. “Rates were increased, but also expenses; then we will continue the same. However, our workers, who previously earned 300 pesos on average (of the lowest wages in the country), today receive a higher amount and that will inevitably lead to better service ”.

According to calculations by OSDE, producing a cubic meter of water, from the reservoir to the tap, costs 1.48 pesos . From there, expenses such as electricity, chemicals, salaries and maintenance of the infrastructure are deducted.

However, for that same liquid volume barely 99 cents are recovered. This occurs, to a large extent, due to “losses due to leaks, a group of people who do not pay for the service or the inefficiencies of the company in managing the collection.”

Close the tap of waste

To improve the taxation process, the OSDE has considered solving the last of these problems by installing new meters in family and work centers.

The goal for 2021 is to manufacture 120,000 meter meters . Firstly, existing and obsolete ones that are on the brink of their useful life will be replaced, also those that suffer some kind of breakage. This task will have to use about 62,000 teams. The rest will be used to cover the demand of state centers, those in the self-employed sector linked to production and those in the residential area, in this order of priority.

Everything will be with the policy of “getting in” where there is a stable flow of water, with good service in terms of time, volume and quality; and then move on to other less advantaged places, such as those that have, say, water every three days, ”explains González, clarifying that only 47 percent of the population receives this liquid daily or on alternate days.

The vice president of the OSDE assures that installing more meters not only helps to obtain more income, but also promotes savings, since it is proven that in the localities where it begins to “meter”, water consumption decreases by a quarter .

The project can achieve that more than 99 cents are entered per cubic meter. If n however, will not change much the picture of the company, for 1.48 pesos is not the “real” cost of production . The true one, the net according to international prices of oil that feeds a kilowatt in Cuban thermoelectric plants, or of imported chemical products and spare parts equipment, is much higher.

“I have a lot of subsidies behind me that I am still not able to account for my expenses. The sum of 1.48 pesos is the expense of the OSDE, but when I extrapolate that to the highest office of the State, the expenses are higher, because I am accounting for the electricity with the value that they charge me, for example. There, in itself, there is already a subsidy that I cannot see ”, argues González. “The truth is that the water supply service is one of the most expensive in the world.”

The OSDE of Water and Sanitation and the Cuban business system of aqueducts and drains should not – and for now cannot – raise their rates excessively as long as “water is not denied” and remain socialist state companies that provide a vital service to the population . They are entities that, plainly, were not conceived to profit, which does not mean that a night of waste comes to which the hand will go, as Ana Belén sang.

Under this logic, more is gained by promoting savings, modernizing the hydraulic infrastructure to improve efficiency, or simply reducing water losses. Any of these three routes is more feasible for the profitability of the company, than the hackneyed – and apparently in danger of becoming fashionable – solution of raising prices.

In fact, González acknowledges, the heart of the matter lies in water losses; The same occurs in the conductors of wells, as in the distribution of urban networks or, even, in indoor spaces from common leaks.

The profitability of the service will continue to depend on the saving capacity and the reduction of water losses that the country achieves. (Photo: Radio Rebelde)

“Every cubic meter that is saved or not lost will reach a user from whom you can charge it. In addition, the service will improve and our effort will be socially recognized by the population. Or, simply, we will not have to pump that cubic meter, which represents less water and electricity costs, ”says González.

Excited, the engineer ponders the aqueducts of Japan and Germany – the best in the world, he maintains – which, after millionaire investments and advanced technology, have managed to waste only about five percent of the water.

The reality of Cuba is very different. In 2020, almost half of every cubic meter of water pumped was lost. In more exact figures, about 43 percent. However , the trend has been to reduce this waste little by little, year after year, since 2019 closed with 47 percentage points and for 2021 it is planned to drop to 39.

Over the years, the government has invested millions in the search for optimal efficiency through the Cuban Hydraulic Rehabilitation Program. But this has been delayed by the ups and downs of the budgetary bets: There is still too much to do, and while the scarce and intermittent water resources of a salinized island continue to be wasted.

The aquifer issue is so complex that it is necessary to go beyond the wallet to perceive that this rise in rates is now a secondary topic. After all, the new price per inhabitant per month, as the vice president of OSDE sentenced, “is almost symbolic.”

(Taken from Bohemia )

A 1,500 ml bottle of Tukola soda produced by Los Portales costs 1.50 CUC in stores that operate in that currency. When this price is calculated according to the current exchange rate (1 CUC = 25.00 CUP), it becomes 37.50 CUP. However, this same product costs 25.00 CUP in some retail stores affiliated with the Ministry of Domestic Commerce. The same applies to this product in can format and to other merchandise that would make up an endless list.

These differences, which have been a constant source of concern within the population, reflect the profound distortions with which the economy has operated for several years. Distortions that derived, in good measure, from the dual currency and, especially, different exchange rates.

For this reason, unification, although definitely no magic wand in appearance or behavior, should contribute to homogenizing current methods of price formation and eliminating distortions that affect both internal and external commerce, and the enterprise system.

According to Margarita de la Caridad Acosta Rodríguez MSc, price policy director at the Ministry of Finance and Prices (MFP), Cuba has traveled a long route before reaching today’s distortions, dating back to the 1990s, when it became necessary to establish the monetary duality and adopt financial reorganization measures including price increases for nonessential products and an end to the provision of some goods and services free of charge.

It was not until 2003 that the Cuban convertible peso (CUC) was introduced in the relations between organizations and in the formation of wholesale prices, as a way of recognizing the imported component of productions and services, she recalls.

In 2004, stores designed to capture hard currency, began to charge in CUC and, one year later, retail prices in CUC of high demand products were frozen, she adds.

Since then, many measures have been implemented to attempt to correct the deformations emerging in the economic price category, one of the most complex and controversial because it has special links to wage, fiscal and trade policies.

In the opinion of Acosta Rodríguez, of special importance were measures taken in 2016 to increase the purchasing power of the Cuban peso, which included the reduction of prices for an important number of food, personal hygiene and cleaning items sold in CUC.

The prices of certain agricultural products were capped as well and, in June of 2019, it was established that there would be no increase in wholesale and retail prices, to avoid counteracting the positive impact of salary raises in the budgeted sector and increased pensions.

In summary, the economy has operated in an environment of a dual currency with a different exchange rate for two different arenas:

In relations between enterprises and in the wholesale market, used is the exchange rate of 1 USD = 1 CUC = 1 CUP.

In relations within the population and retail commerce, used is the exchange rate of 1 CUC = 25 CUP.

At the same time, the U.S. economic blockade has been aggressively escalated and the severe material and financial restrictions it causes remain in place. In addition, reducing the country’s dependence on imports has not been possible, despite attempts made. Cuba has not been able to escape the effects of the economic crisis and consequent price increases in foreign markets.

We must also take into consideration the mandates included in key documents approved at the Sixth and Seventh Congresses of the Communist Party of Cuba (PCC), to review and comprehensively overhaul the price system, Acosta Rodríguez adds.

These documents provide the foundation for the diagnosis conducted, including factors that influence the system’s performance, aspects linked to accounting and supervision, as well as the identification of economic distortions that are expressed in prices.

Today, in general terms, the specialist explains, prices do not reflect the behavior of the market, due to the disconnection between wholesale and retail prices, which responds to the existence of subsidies and the intention of capturing hard currency via pricing of various products.

Perhaps the most “costly” distortion, economically speaking, is associated with the current exchange rate for relations between enterprises (1 USD = 1 CUC = 1 CUP). According to the MFP directive, “This prevents prices from serving as an objective measure of economic facts and discourages exports and the replacement of purchases abroad, based on distortions in the calculation of costs and expenses.”

In other words, with the 1 x 1 exchange rate for relations between enterprises, in general, the price of the imported product is lower than the price of a domestic one, which is totally contradictory and accentuates the tendency to import, undermining competitiveness and creativity.

In the words of Acosta Rodríguez, “Most of the productions, whether substitutes for imports or destined for export, receive significant subsidies or have implicit subsidies which are covered by the prices of other goods and services. However, there are wholesale prices that contain other converters, which are not at the 1 x 1 exchange rate.”

Evidently, the expert goes on, the context of monetary and exchange duality has limited the flexibility of price and tariff formation, which, for the most part, has been isolated from foreign market prices.

Such procedures, she adds, have been based on methods of expenditure, which have led to the concealment of inefficiency and their cost transferred to the economy, made invisible by both structural and technological issues, difficulties in accounting records, the non-implementation of cost systems and other irregularities.

Another notable distortion is the sale of the same products at different wholesale prices, mainly due to the existence of a market in CUC and another in CUP. The same product is usually sold:

1. To state entities, at a price that contains components in both CUP and CUC.

2. To joint ventures, at a price that considers the total amount in CUC.

3. To retail chains and the tourism industry, at a price that includes the CUC component in most national products, while financing the industry for the difference in CUP.

Taking into account these deformations, the MFP directive recognizes that prices do not always cover all expenses incurred. To this should be added the approval of incentives paid in CUC to workers in various sectors.

Likewise, conversion rates other than 1 x 1 have been applied on an experimental basis to support the wages of workers in priority areas, as mechanisms to stimulate the workforce, an expense which is not considered in setting prices. Such is the case in:

-Foreign investment projects

-The Mariel Special Development Zone

-Construction of prioritized works

In all these cases, the formation of prices at the 1 x 1 rate is recognized; although this unquestionably implies an added burden for the state budget, which finances the difference at the approved conversion rate, she emphasizes.

The specialist also refers to the different approaches in the formation of prices for the state sector and the non-state sector and, in turn, emphasizes the disconnection between wholesale prices and those the population pays. Today, producers do not receive the majority of the final price, she adds.

Similarly, not to be overlooked is the high level of subsidy reflected in the retail prices of products that make up the regulated family basket of foodstuffs, including rice, beans, sugar, chicken and other regulated meat products, as well as basic services such as electricity, gas, water and basic telephone services.

The provision of subsidies to specific persons is still very limited, and issues identified in programmatic documents that support the updating of the economic model have not been addressed.

Acosta Rodríguez believes that other structural problems also affect price setting, such as the existence of many levels of circulation of goods prior to their final destination.

Although the approval of wholesale prices has been decentralized, the authority granted enterprises remains insufficient, in her opinion.

Meanwhile, many retail prices are still established centrally and little power has been granted to municipal authorities to adjust these.

All of this also contributes to shortcomings in complying with the constitutional principle of local autonomy.

The lack of qualified personnel in the area of prices, insufficient control and inspection work, gaps in training, and the lack of systemic public information work on the setting and approval of prices are all aggravating factors, which are equally relevant when analyzing any deviation.

Prices currently express the behavior of the economy with all its irregularities, the head of price policy at the MFP reiterates.

In her opinion, the lack of flexibility in both methods of price setting and the authority to approve prices at different levels of the enterprise structure, has limited autonomy in establishing prices. The consequences have become Gordian knots for the economy and translate into delays and low levels of efficiency and competiveness of national products and services.

Furthermore, through July of 2019, when regulations limiting price increases were established, there was a strong tendency among enterprises to raise the category of their products to gain more earnings and increase pay-for-performance bonuses, which introduced a new distortion.

To assess the impact of retail price distortions on domestic commerce, it is essential to take into account the way the market is segmented: one regulated in CUP, one in CUP and CUC and, recently, one in freely convertible currency (MLC).

As for the regulated market, Yosvany Pupo Otero, general director of Services at the Ministry of Domestic Trade (MINCIN), recalls that in 1962, Law no. 1015 established the system of rationed supply of everyday consumer goods, the “libreta” that continues to live on.

He likewise noted the level to which the determination of prices in Cuba is concentrated, considering that among the substantive elements in this economic category involves who approves them and how they are set.

Today, Pupo Otero states, the approval of retail prices for products and services essential to the population is the responsibility of the Council of Ministers’ Executive Committee and the Ministry of Finance and Prices, with a view toward supporting social policies and basic needs.

Meanwhile, the determination of the value of another group of products and services is the responsibility of the Ministry of Domestic Commerce; the Wholesale Food and Consumer Goods Enterprise Group; the Industrial Products and Services Distribution Group; as well as the administration board in all provinces and the Isle of Youth special municipality.

As is known, the regulated market includes, basically, the family basket of foodstuffs, through which a group of products is made available to all at subsidized prices. In other words, for these products the population pays a price that is far below the real cost, and the difference is assumed by the state budget.

Similarly, other products sold at subsidized prices include items in special diets for some 11,817 children, and those for some 1,360,332 adults with health problems, Pupo Otero adds.

Subsidies are also reflected in retail process via programs to distribute non-food products to meet specific needs such as:

-Layette for newborns: textile module, mattress and cradle.

-A module for bed-ridden and incontinent patients composed of antiseptic fabric, towel, sanitary rubber and soaps. In this program, the payment is assumed by the state.

-School uniforms for students in primary, secondary, pre-university and poly-technical vocational schools. An annual average of 3.8 million uniforms are sold at subsidized prices, ranging from 2.00 to 9.80 CUP.

-Prophylactic footwear: sold by prescription, according to the distribution policy.

According to the Pupo Otero, these programs function on the basis of a few fundamental principles:

-Consumers can acquire these products only in assigned establishments.

-The purchase is noted in the ration book (in the case of the regulated family food basket) and according to established procedures for other programs.

-Sales are made on a fixed per capita basis, according to the distribution policy approved each year.

-The distribution is cyclical (monthly, twice-yearly, annual).

Regarding the setting of prices in the unregulated CUP market, Yosvany Pupo explains that a component in CUC is recognized as a rule for raw materials and imported materials, and a component in CUP.

To support understanding of these technicalities, he takes as a reference the construction materials program, in which several methods of price setting coexist.

On the one hand, products are sold at unsubsidized prices in some cases, in which the CUC component is considered at the 1 CUC = 25 CUP exchange rate and the CUP component of the wholesale price is recognized.

In the case of products that contribute to water saving and housing programs, the price setting algorithm is different and lower conversion rates are used, which affects enterprise earnings.

And, finally, this same program annually guarantees the requirements for basic housing units, in other words, subsidies for constructive work, reflecting the direction that the economy must take sooner rather than later: subsidizing people rather than products.

Pupo Otero cited a few other examples to illustrate the multiple existing distortions.

These include the most economical and subsidized prices applied in Attention to the Family (SAF) and school snack programs, both activities run by municipal food service enterprises.

In the first, meals with established nutritional requirements are sold at a price of 1.00 CUP, to benefit more than 76,000 individuals, more than 11,000 of whom receive social assistance. However, once again, the real cost of the product is higher, which affects the financial performance of these companies.

Regarding the school lunch program, the distortions are even more acute, since students and teachers’ lunches are provided free of charge, in a network of more than 774 schools, with 138,851 students and 30,984 workers.

In Havana, nonetheless, the experience of including the price of the snack in the teachers’ salaries has been favorably received since this allows them to make their own choices and pay with their earnings. More than the exception, this practice should be the rule in a future scenario of monetary and exchange rate unification.

As Margarita de la Caridad Acosta Rodríguez, director of Price Policy at the MFP, has already noted, undoubtedly, “The transformations foreseen regarding prices must be accompanied by other changes in strategic sectors, in commerce, wage and fiscal policies that, in a gradual, comprehensive manner, allow for important advances in the economic and social life of our nation.”

BASIC CONCEPTS:

PRICE: Monetary expression of the value of goods and products. In practice, prices are associated with the value of products and fees for services. When we talk about prices, service fees are also included.

PRICE SYSTEM: The interlinked set of different types of prices, including legal frameworks, regulations, entities and other actors involved in the setting, approval and application of prices, as well as the population, who as consumers, are a very important and dynamic part of the system.

PRICES CAN BE:

Wholesale: Paid by legal persons.

Agricultural: Paid by wholesalers to agricultural producers.

Retail: Paid by the population, including fees for services.

MONETARY REORDERING WILL INCLUDE:

-The minimum salary will be based on the cost of a basket of essential goods and services, respecting the principle of covering the needs of the worker and his/her family.

-Subsidies will be for persons, not articles or services. Insolvency requests will be addressed within 48 hours.

-In the first stages of monetary and exchange unification, the total subsidies for specific products for children from 0 to 6 years of age in Cuba will be maintained.

-Medicines for the treatment of chronic diseases will be subsidized.

-Some of the 42 products with centralized prices include yogurt, processed cheese, mortadella, pasta, sausage, fuel, electricity, water, cement, sugar, coffee, ground meat, compotes and milk.

-Enterprises will set other prices, but within limits.

-A salary increase has been designed to allow workers to pay the new prices when that day comes.

-A strategy has been planned to invest in companies with losses, to avoid closures, unemployment, and the deterioration of services to the population.

(Taken from Granma)

1- Powdered milk; up to 9% and liquid milk, 20%.
For example: A 0.5 kg tri-laminate bag of powdered milk is reduced from 2.90 CUC to 2.65 CUC; and a 0.5 kg plastic bag of the same product to 2.55 CUC.
2- 25kg sacks of powdered milk are reduced to 119.85 CUC in TRD-Caribe and CIMEX stores that sell boxes of chicken.
3- Custards, jellies, rice, dry grains and canned foods (meat, sea food, fruits and vegetables) are reduced by 25 to 30%.

4- Children’s footwear by up to 6%.
Prices for products listed in points three and four are not published given the large range of offers.
These measures reflect the political will of the Party and government to support the population, in particular children and the elderly, specifically focused on implementing strategies to combat the effects of current demographic trends in Cuban society.

Ministry of Finance and Prices